If Martha Stewart went to jail for engaging in some friendly insider trading, what about the former Goldman Sachs CEO and Secretary of the Treasury?
After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” — a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.
Apparently one fund manager in attendance was shocked that Paulson would divulge such information to them. Of course there is no way to know whether those present at this little insider training happy hour actually acted on the information.